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Crypto Trading and Markets Flashcards

7 cards from real Cryptocurrency practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. What is 'dollar-cost averaging' (DCA) in cryptocurrency investing?

    Answer: Investing a fixed amount at regular intervals regardless of price

    DCA involves investing a consistent fixed amount on a set schedule, reducing the impact of volatility by averaging the purchase price over time.

  2. What is the primary purpose of a cryptocurrency exchange's 'order book'?

    Answer: To display outstanding buy and sell limit orders at various price levels

    An order book shows all pending buy (bid) and sell (ask) limit orders, providing transparency into current market supply and demand.

  3. If Bitcoin's dominance index rises from 45% to 55%, what does this typically suggest?

    Answer: Capital is rotating out of altcoins into Bitcoin

    Rising Bitcoin dominance typically means Bitcoin is gaining market share relative to altcoins, often indicating a 'flight to safety' within crypto.

  4. What is a 'wick' on a candlestick chart in crypto trading?

    Answer: The thin line showing the high and low price reached during the period

    Wicks (also called shadows) are the thin lines extending above and below the candle body, representing the highest and lowest prices reached in the time period.

  5. What is the significance of 'support' and 'resistance' levels in crypto charting?

    Answer: Historical price zones where buying or selling pressure has previously concentrated

    Support is a price level where buying interest has historically halted declines, while resistance is where selling pressure has capped advances.

  6. In leveraged crypto trading, what is a 'margin call'?

    Answer: A broker's demand to deposit more funds when losses reduce collateral below the required level

    A margin call occurs when the value of a leveraged account's collateral falls below the maintenance margin requirement, prompting a demand for additional funds.

  7. What is 'arbitrage' in cryptocurrency markets?

    Answer: Profiting from price differences for the same asset across different exchanges

    Crypto arbitrage exploits temporary price discrepancies for the same asset across different exchanges to lock in a risk-free profit.